Financial model

A simplified representation of a financial situation, using selected assumptions.

Financial models are widely used in practice for valuation, and to support financial decisions and risk management.

Models are also an important tool in finance coaching and financial education.

In simple terms, a model:

• Presents a financial calculation (or calculations)
• In a way that enables the user to understand it and to challenge it, especially about its assumptions.

See also

• Ceteris paribus
• Coaching
• Deterministic
• Financial modelling
• Model
• Risk management
• Rounding
• Sensitivity analysis
• Simulation
• Stochastic